How Scarcity Mindset Impacts Your Money: Its More Influential Than You Think

Is the Scarcity Mindset responsible for poverty?

If you listen to financial gurus, you’d think that all impoverished people are only struggling because they don’t have the correct mindset. 

Although poverty is far more complicated than mindset, there are some grains of truth to the theory. 

Discover what a scarcity mindset is, how it affects your finances, and how it contributes to poverty on a personal and systematic level. 

What is a Scarcity Mindset?

A scarcity mindset refers to the psychological process that occurs when people can’t meet their basic needs. It causes the brain to panic and make choices based on the incorrect assumption that resources are scarce and that you’ll never have another opportunity to do whatever it is that you’re considering doing.

People act differently when they aren’t getting what they need, and often in unexpected ways. Poor people buy junk they don’t need. Busy people procrastinate. People who are trying to lose weight binge eat. 

All these counterintuitive behaviors can be attributed to a scarcity mindset. 

When we are lacking something, it becomes the only thing we can focus on. We make irrational decisions that may soothe that need in the short term but make matters worse in the long term.

How Scarcity Impacts Finances

Scarcity has a massive impact on personal finance. 

When you believe money is scarce, you make irrational decisions with the little bit of money you do have. 

You buy junk you don’t need because you fear you’ll never have the opportunity to get it again. You spend rather than save because any money you try to save will just disappear anyway. Some folks struggling with a scarcity mindset don’t even have access to a bank account to store their money safely. They know the bank will steal their hard-earned cash if they don’t spend it. 

A scarcity mindset inhibits long-term planning. If you don’t believe you’ll have access to money in the future, why bother even thinking about it? Why force yourself to struggle even more when you can’t meet your basic needs?

Does a Scarcity Mindset Keep People Poor?

Although a scarcity mindset can contribute to bad financial decisions in some cases, the biggest proponents of this theory often claim that it’s the ONLY thing keeping people poor. 

That’s just not true for everyone. 

You can’t wish your way out of poverty or change your money mindset and magically get a job that pays a living wage. 

However, it is true for some people. 

People who fought and clawed their way out of poverty and into the middle class may still make poor financial choices based on a scarcity mindset. Those who learned scarcity from their families may not realize they’re still operating under the same mindset. 

If a scarcity mindset is keeping you poor, here’s what you can do. 

Fight Your Impulses

Impulsivity is a top symptom of scarcity. You need the thing now, or you can never have it. 

Fight it. 

Take a deep breath and consider why you want it. Set it aside and wait a day. If you truly want it, you can go back for it. 

Separate Wants from Needs

A scarcity mindset inhibits decision-making. It writhes around in our heads, making it nearly impossible to separate wants from needs. 

When struggling with scarcity, you must make a conscious decision to figure out the difference. You need food, but do you need to eat out seven days a week? 

When you aren’t tired or hungry, take time to separate your wants from your needs. Write it in a journal to review it when your primal brain tries to take over. 

Set a Budget

Everyone hates budgeting, but it’s the key to stress-free finances. 

When establishing your budget, give yourself some pocket money you can spend on this and that so you don’t feel like you’re limiting yourself. 

Make Lists

Lists help us discover our needs and prioritize our wants. They prevent us from overspending and help us manage our lives. 

Make a list every time you need to go to the store (especially a home goods store like Target!). 

Stick to your list to avoid overspending. 

Meditate

If you’re aware that you’re struggling with a scarcity mindset, meditation can help. 

Meditation helps us feel grounded. It can help us resolve inner feelings of turmoil between our conscious minds and unconscious feelings.  

Journal

Journaling helps you uncover and resolve your inner conflicts. 

It can help you overcome your scarcity mindset. 

Instead of buying, write. Tell yourself why you need that random thing. Explain why you’re buying instead of saving. Use the journal pages to convince yourself that you can have abundance. 

Get Help

If you can’t change your mindset on your own, consider professional assistance. 

A financial advisor can help you create a financial plan for budgeting, saving, and investing. They can help you realize you don’t need to worry about money. 

A therapist can help you overcome your unconscious fear of scarcity. 

When Changing Your Mindset Won’t Help

Millions of people are trapped in poverty, and telling them just to change their money mindset is tone-deaf at best but mostly insulting. 

Our system keeps people poor.  

We need to solve the scarcity mindset at the societal level. 

Society’s Scarcity Mindset

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Andrew Yang’s book “The War on Normal People” teaches vital lessons about scarcity at the societal level. I’ve always understood the concept of an individual scarcity mindset, but the book highlights how scarcity affects our entire society. 

Some of the woes we have with our modern way of life are partly because we, as a society, have embraced a collective scarcity mindset.

“Who’s going to pay for it?” 

“But the national deficit?” 

“We don’t have the money for that!” 

These common retorts to any policy idea that would improve the lives of regular people drip with scarcity. A large subset of the population truly believes that there aren’t enough resources to go around. They fear giving to others, thinking there won’t be enough left for them. 

A belief in societal scarcity impacts voting and policy decisions.

How Can We Shift to an Abundance Mindset?

We, as a society, must shift our views. 

Our ingenuity as a species knows no bounds. We adapt, overcome, and find solutions to our most pressing problems. 

We can solve problems like clean energy, global hunger, and housing if we work together.

We could care for each other, and each person could have enough to thrive. 

How to Fix Society’s Scarcity Mindset

Shifting society to an abundance mindset is even more complex than shifting our personal mindsets. 

However, together, we can do it. 

Here are some ways we can work towards a society of abundance. 

Educate Yourself

To support abundance, you must believe it’s possible. 

Learn how the world really works by reading research papers and law reviews. Discover how policy enriches a certain segment of the population at the expense of everyone else and how small legal changes could spread abundance. 

Follow scientists as they discover new technologies to solve global problems, and listen to your social circle so you know their pain points. 

Knowledge is half the battle. 

Start the Conversations

A bountiful world surrounds us, but many folks can’t see it. 

You can help them. 

Share memes featuring abundance. Talk to your friends about all the cool things scientists developed (like water desalination, clean energy ideas, etc.). Discuss all the positive things happening in the world, and highlight everything society can do to share the wealth with everyone. 

These small conversations can spark a shared interest in those around you. 

Policy Changes

Once we know the problems, we can enact change to solve them. 

You’ve educated yourself on how policy can impact scarcity, so now you can advocate to change those policies. Vote for politicians who share your views. Donate to causes that fight for the policies you support. 

Join groups that work to support scarcity. 

One person won’t be able to change policy overnight, but you can start a movement that will help. 

Scarcity Mindset Impacts More than You Realize

The scarcity mindset impacts individuals and societies. We must break free from the idea that there isn’t enough and embrace abundance to be successful, both individually and as a civilization. 

Are you ready to welcome abundance into your life, and society?